Argentine leader says European 'protectionism' is main hurdle to Mercosur-EU deal

BUENOS AIRES (Reuters) -Argentine President Alberto Fernandez said on Wednesday "protectionism" in some European sectors was the biggest challenge for a free trade agreement between the Southern Common Market, also known as Mercosur, and the European Union.

The EU and Mercosur, made up of Argentina, Brazil, Paraguay and Uruguay, agreed in June 2019 to create a free-trade area of 700 million people after two decades of talks.

However, the agreement was not ratified due to concerns, especially in France and the European Parliament, about deforestation in the Amazon and scepticism regarding Brazil's efforts to fight climate change under President Jair Bolsonaro.

Speaking with German Chancellor Olaf Scholz at a joint news conference in Berlin, Fernandez said: "What we really need to discuss is also to see how we act against the protectionism of certain sectors of the European economy."

Economic asymmetries between Europe and Latin America, deepened by the coronavirus pandemic and by war in Ukraine, also posed difficulties, he said.

Scholz said he would welcome further progress on the agreement.

"The deal is important and there are some questions that concern us on environmental standards, on social standards, but in the end it is about making it a success," said Scholz.

The trade deal would need to be approved by the European Parliament and the 27 EU member states.

Following his visit to Germany, Fernandez will meet French President Emmanuel Macron on Friday to discuss the agreement.

EU Commissioner Virginijus Sinkevicius told Reuters earlier this month that the EU and Mercosur could resolve the environmental concerns holding up the free trade deal by the end of this year.

(Reporting by Nicolas Misculin in Buenos Aires and Madeline Chambers in Berlin; Writing by Kylie Madry; Editing by Mark Porter and Gareth Jones)